Major BTC Resistance Above $5,500 Could Signal Pullback

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BTC Resistance Test

Potential Pullback Looms As Bitcoin Approaches Major Resistance Above $5,500

The discussions for a substantial market correction are gaining strength. As Bitcoin move toward another heavy resistance barrier buying pressure is more than likely to decline as previous charts have illustrated. If and how far it will fall continues to be the big question this week.

Bitcoin Approaching 50 Week MA

The minute Bitcoin broke through the 200 day moving average there was a considerable amount of optimism for a move up towards $6,000. Having said that yet another big barrier stands in its way in the form of the 50 week moving average which is aligned with additional horizontal resistance.

According to trader and analyst Josh Rager this might design a pivotal point for Bitcoin which has previously been held down by this technical indicator;

In the past then Bitcoin’s highest price in the short-term may merely be $5,634 where it matches the 50 week moving average. In the course of the bear market of 2015 this level proved to be a reversal point of the rally which led to a final capitulation before any major recovery began. The dump then saw BTC fall to around $200 which was 82% below its prior all-time high. Sound familiar?

The 200 week moving average, not to be confused with the 200 day MA which Bitcoin broke through last week, has been a solid support zone then and today.

Pullback or More Consolidation to Come?

Charts are terrific things as they can tell whatever story you wish to hear. As a counter to the possible pullback theory is continued consolidation. Bitcoin consolidate for 150 days around $6,000 before breaking down. When it did it dumped 50%.

BTC also consolidated for 130 days at roughly $4,000 before breaking out which has driven a 25% gain.

The call for Bitcoin back at $6,000 is likewise a strong one nevertheless at the moment it appears that the bearish expectation is the most dominant. Trading is predominately psychological and many make the same mistakes over and over again. As Twitter’s ‘CryptoFib’ put it;

“The thing about trading that cracks me up is this.  Everybody wants to buy when it is going up into resistance.  But, they never buy when it is going down into support.  Amazing how that happens and why 90% of traders fail. It is all in the mind folks.”

These behavioral patterns are precisely what determine the levels of support and resistance to begin with and propel market momentum in each directions.

At the time of writing Bitcoin was still holding up above $5,200, but only just after hitting $5,300 twice and pulling back twice. From the beginning of last Tuesday’s big pump when Bitcoin achieved $4,700 it is up over 11%. What is ensured is that when it does correct it will definitely drop hard and fast in advance of discovering a new support level which is likely to be in the low $4,000 s.

Image from Shutterstock

The post Potential Pullback Looms As Bitcoin Approaches Major Resistance Above $5,500 appeared first on NewsBTC.

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